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Taiwan Weighs High-Tech Strategic Partnership with the U.S. Amid Tariff Talks

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Taiwan is considering the creation of a high-tech strategic partnership with the United States, as Washington seeks greater Taiwanese investment and industrial cooperation, Taiwan’s top tariff negotiator said on Thursday.

Taiwan — home to the world’s leading contract chip manufacturer, TSMC — currently faces a 20% U.S. tariff on its exports and is looking to negotiate a reduction. The initiative comes as both economies explore deeper technological collaboration amid growing global competition over semiconductor supply chains.

Vice Premier Cheng Li-chiun, who heads Taipei’s delegation in the ongoing tariff talks, said she remains optimistic about reaching a consensus with the U.S. on what she called a “Taiwan model” for investment.

“The current negotiation focus is that the United States expects us to expand investments and engage in supply chain cooperation,” Cheng told reporters in Taipei after returning from Washington.

She emphasized that Taiwan’s approach would not involve relocating its core supply chains, but rather expanding production capacity on U.S. soil in strategic sectors. The plan would include export credit guarantees, joint R&D projects, and the co-development of industrial clusters between the two countries.

TSMC’S ROLE AND THE U.S. EXPECTATIONS

While the U.S. has expressed interest in more domestic semiconductor production, Cheng clarified that TSMC was not directly involved in the latest negotiation round. The company, currently investing $165 billion in chip plants in Arizona, continues to keep most of its production operations in Taiwan.

She also dismissed recent reports that U.S. Commerce Secretary Howard Lutnick had proposed a 50-50 chip production split, saying:

“That idea was not raised in our talks, and it is not something Taiwan would agree to.”

Cheng noted that Washington’s priority appears to be strengthening its domestic chip production to reduce supply chain dependence on Asia, while Taiwan’s long-term strategy is to stay rooted at home but expand globally through bilateral cooperation.

INDUSTRIAL PARTNERSHIP, NOT RELOCATION

The envisioned “Taiwan model,” Cheng said, represents a strategic partnership framework—one where the island’s companies would invest in R&D and manufacturing capacity abroad, supported by governmental financial and policy mechanisms, without shifting their operational core from Taiwan.

Neither the U.S. Commerce Department nor the Office of the U.S. Trade Representative has commented publicly on the discussions, which continued as the U.S. government entered a temporary shutdown this week.

With Taiwan’s semiconductor industry playing a pivotal role in the global AI and electronics boom, both Taipei and Washington are looking to balance national security priorities with economic growth.

“Our aim,” Cheng concluded, “is to remain rooted in Taiwan, deploy around the world, and build bilateral strategic cooperation that supports both sides’ technological ambitions.”

Analysts weigh in on Trump–Xi call over trade and TikTok

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A phone call between U.S. President Donald Trump and Chinese President Xi Jinping on Friday eased tensions but left major issues unresolved, particularly the fate of TikTok and broader trade negotiations. Analysts say the call highlighted China’s confidence in playing the long game, while the U.S. appeared eager to keep talks alive.

Scott Kennedy (CSIS) noted that neither side announced a firm deal, suggesting negotiations are ongoing or that leaders are holding back until more comprehensive progress is made. He argued China feels “relatively unthreatened” and that the talks are unfolding on Xi’s terms.

Bonnie Glaser (German Marshall Fund) observed Trump’s readout was more explicit about TikTok, while Xi avoided Taiwan—perhaps reassured by recent U.S. decisions to delay arms sales and downgrade Taiwan-related engagements.

Craig Singleton (FDD) warned that China may be using summit diplomacy to stall U.S. competitive measures while extracting concessions. He said Beijing is trading symbolic gestures, like fentanyl actions, for relief on tariffs and tech controls, with Washington “hungry for a summit” more than China.

William Yang (ICG) emphasized that Beijing wants U.S. export controls lifted, particularly on advanced chips, before committing to bigger trade deliverables. He said China is betting Trump’s desire for a deal will push him toward concessions, while holding leverage in rare earth supply chains.

Danny Russel (Asia Society) downplayed the outcomes, calling the TikTok reference the only semi-concrete result, while noting the deferral of Trump’s China visit shows how slowly negotiations are moving.

Patrick Cronin (Hudson Institute) framed the call as a temporary easing of rivalry, giving both leaders economic “breathing space” while masking deeper great-power competition beneath the surface.

Ali Wyne (ICG) highlighted the prospect of three in-person meetings—at APEC in South Korea, a Trump trip to China next year, and an eventual Xi visit to the U.S.—calling the sustained engagement welcome, even if no breakthrough on TikTok emerged.

Overall, analysts see Beijing as confident, patient, and willing to leverage time and resources, while Washington seeks symbolic wins to show progress, leaving the TikTok deal and trade negotiations hanging in limbo.

Taiwan leverages chip power for diplomacy at Semicon trade show

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At this year’s Semicon trade show in Taipei, Taiwan elevated its “chip diplomacy” strategy, using its dominance in the semiconductor industry to strengthen diplomatic ties with both established allies and new partners.

Taiwan’s TSMC, the world’s largest contract chipmaker, sits at the center of global supply chains but Taiwan itself remains diplomatically isolated due to China’s sovereignty claims. To counter this, Taiwan’s foreign ministry co-sponsored a Semicon geopolitics panel for the first time, where Foreign Minister Lin Chia-lung described semiconductors and AI as “strategic resources” and stressed the need for trusted, “non-red” supply chains outside China.

The outreach comes as Taiwan courts “like-minded” democracies in Central and Eastern Europe, where sympathy has grown following Russia’s invasion of Ukraine. Czech Science Minister Marek Zenisek, speaking alongside President Lai Ching-te, highlighted shared democratic values and pitched his country as a supplier for TSMC’s first European fab in Dresden, Germany.

But Semicon also drew less expected guests. Costa Rica, which cut ties with Taiwan in 2007 in favor of China, attended for the first time with a national pavilion. And in another first, a group of 10 African tech entrepreneurs joined, supported by the French-African Foundation. Joelle Itoua Owona, CEO of AfriWell Health in the Republic of Congo, said African governments want to diversify partnerships beyond China, calling Taiwan “an additional friend.”

With 17 country pavilions—the most ever— this year’s Semicon showcased how Taiwan’s chip industry has become a powerful diplomatic tool. Beyond chips and AI, the trade show highlighted Taiwan’s role in building global coalitions at a time of intensifying pressure from Beijing.